(17 October 2019, Government House, Perth)
Hon Minister Tinley,
Mr. Adam Hadley, President of ACBC WA Branch,
Mr. Sun Xiaoxuan, President of CCCA Perth Branch,
Distinguished guests,
Ladies and Gentlemen,
I wish to thank Minister Tinley for initiating and patronizing this Roundtable, which again demonstrates the importance attached by the State government on increasing China trade and investment in WA. I thank ACBC WA and CCCA Perth for their support and efforts in organizing this event. And may I welcome delegations from China and the eastern coast for joining us in Perth. I would like to share with the business community on our bilateral trade and investment prospects and put on board some proposals for your consideration.
Let me start by striking a positive note. The latest round of China-U.S. high-level economic and trade consultations concluded last week, with substantive progress in such areas as agriculture, intellectual property rights protection, exchange rate, financial services, expanding trade cooperation, technology transfer and dispute settlement. The two sides also discussed the arrangement for negotiations going forward and agreed to work towards making a final deal. This is a piece of good news that make the world feel relieved a little bit. This Monday the Australian reported that Australia wins big in US-China trade war, with the first current account surplus in more than four decades. So for Australia, so far so good.
But in the longer run, there remains uncertainties given the complexity and toughness of the negotiation. After over a year's standoff, I guess the US has come to realize that the trade war has not made and will never make America great again. The tariff measures already have an impact on US economy and threaten global economic growth. Yesterday the International Monetary Fund (IMF) has once again downgraded 2019 global growth forecast to 3.0 percent, the lowest in a decade, and global trade growth has dropped to 1 percent, the slowest in seven years.
China is willing to work together with the US, following the principle and direction set by the two heads of state, to reach a win-win agreement. We hope the US will meet China halfway and engage in consultations with good faith and credibility, address each other's concerns on the basis of equality and mutual respect, to promote a healthy and steady bilateral economic relations, and jointly safeguard global economic stability and development.
On the prospects of the Chinese economy, we must admit that it may not be all smooth sailing. Difficulties or even perils are inevitable. Whatever the future might bring, China is confident of meeting challenges head on, turning risks into opportunities. For us, the fundamental solution is to grow stronger through reform and opening up. With the enormous demand from the domestic market, deeper supply-side structural reform will comprehensively enhance the competitiveness of Chinese products and companies. We still have sufficient room for fiscal and monetary policy maneuvers. China can maintain sound momentum for sustainable and healthy economic development, and our economic prospects are bright.
I would now like to touch upon the trade and investment opportunities China offers, by quoting some WTO statistics. In 2018 China's shares of the world's total imports and exports of goods were 10.8 percent and 12.8 percent. From 2001 to 2018, the two figures grew by a yearly average of 13.8 percent. China's overseas investment reached US$143 billion, a yearly average growth of 28.2 percent since 2002. The Belt and Road Initiative will give a further boost to China's overseas trade and investment in the coming years. According to a World Bank research report, the BRI will increase trade in participating countries by 2.8 to 9.7 percent, global trade by 1.7 to 6.2 percent and global income by 0.7 to 2.9 percent.
Another figure of an MGI report indicates that, by 2040, the integration between China and the rest of the world is expected to drive economic value of US$22 trillion to US$37 trillion, equivalent to 15 to 26 percent of global GDP. Strengthened cooperation between China and other countries will create enormous economic value.
To be more specific, our economic structure is undergoing a profound adjustment, industrial upgrading is continuing, and new economic growth areas are constantly emerging. The urbanization rate of permanent residents reached 59.6 percent in 2018 and will increase steadily. This will increase demands in various areas, such as infrastructure, real estate, new retail, medical treatment and public health, education, culture and entertainment, thus providing an enormous market for countries all over the world. In the coming 15 years, China's imports of goods and services are expected to exceed US$30 trillion and US$10 trillion.
Meanwhile more and more Chinese enterprises will invest abroad, and more Chinese will study, work and travel abroad. In recent years, China has maintained its position as the world's largest source of overseas tourists; in 2018, Chinese outbound tourists numbered nearly 150 million.
We have launched and will continue to implement a host of major opening-up measures, including trade and investment liberalization and facilitation policies. We have formulated the Foreign Investment Law, and implemented the system of pre-establishment national treatment plus a negative list across the board. We continue to relax market access, and has made great efforts to establish pilots for opening wider to the world. With lower overall tariffs, a shorter negative list, easier market access, more transparent market rules, and a more attractive business environment, China will build an open economy of higher quality, bringing more opportunities for growth, transformation and innovation to the world.
Coming to bilateral trade between China and Australia, there is also good news. According to latest report in October, China takes a record 38 percent of Australian exports, worth 117 billion, more than any country. The rapid increase has been driven by higher iron ore prices this year, but also China's stronger and more diverse demand for Australian exports including everything from beef, wine and dairy to education.
WA contributes to a large share of this growth in terms of Iron ore and has great potential in other fields. Premier McGowen as well as the mining giants have been outspoken recently on the importance of China to WA economy and urged the federal government to protect our relations. The Asian Engagement Strategy also highlighted the opportunities presented by Asia including China in the coming decades. WA has a very solid foundation of cooperation with China. Now it's time to turn the vision of the government and the aspiration of the business community into concrete actions.
On the policy level, the overall bilateral relations will to a large extent set the tone for the future of WA's relation with China. It is in the fundamental interest of WA economy that this relationship be kept sound and robust. It is important that the voice from the West Coast be heard in handling our bilateral relations. But from a practical perspective, what are the factors that can make a difference?
First, the Belt and Road Initiative. The B&R is an initiative for economic cooperation, not one for geopolitical or military alliance. In 2018 the value of trade in goods between China and B&R countries reached 1.3 trillion US dollars, growing by 16.4 percent year on year. Trade in services between China and other B&R countries grew by 18.4% from 2016 to 2017. We hope that WA will not miss the opportunity and make a decision before it's too late. The B&R will inject political and policy incentive and institutional support for WA to capitalize on the trade and investment opportunities presented by China.
Secondly, direct flights. The trial flight of China Eastern is a big boost for closer ties and connectivity between WA and China. We must seize this opportunity to promote WA to attract more Chinese visitors, tourists and students. The business community can play a big role in this endeavor. It will be more effective if the state government could coordinate and mobilize the resources to make a package deal to promote brand WA. And we should start working on a direct flight from Beijing to connect WA with the northern part of China.
Thirdly, the China International Import Expo (CIIE). Australia's presence at the First CIIE was strong, More than 200 Australian brands were showcased, with the third largest number of products and six largest number of exhibitors. 11 commercial agreements were signed with a total amount of 2.44 billion US dollars in tourism, resources, infrastructure, e-commerce and logistics. The second CIIE will be held in Shanghai in November. We have only 6 WA companies registered for the second CIIE and the Consulate is ready to join hands with the federal and state agencies to plan well in advance to facilitate WA business participation for the third one.
Fourthly, E-commerce, which remains a key driver of consumption growth in China, with the number of online shoppers reaching 610 million by the end of last year and 97 people out of 100 using mobile phones to shop online. China's online retail sales reached about 562 billion US dollars in the first five months of 2019, accounting for over one-fifth of total retail sales of consumer goods. For agriculture and health products from WA, that's a good way to sell. I am happy to learn that Chemist's Warehouse will open its first shop in Zhengzhou. And Didi taxi has just started its service in Perth. This is the humane face of globalization that benefits people in different countries.
I hope that my observations will provide some food for thought in our discussions today and I am looking forward to hearing from you, the perspective of the business community. The Chinese Consulate will stretch out and be more proactive in facilitating communications and cooperation between WA and China, and work together with you to push the level of our trade and investment to a new height.
I thank you.